kcjenkins

I have to disagree partially with the bolded statement above. An accountant can ethically only inform the client of LEGAL OPTIONS, and reporting asserts which you told us have a FMV of $50K. as having no value is not such an option. Removing the wolf at the door by calling it a dog is not an option you can ethically advise.

Lion is right. W forms go to SSA which can scan forms printed on plain paper. 1099s go the IRS which still can not.

What I like about Gruntworx is the very fact that it is not tied to any one program.

Are you saying that the AMT is not Draconian? creation by Draco (in Draco (Greek lawgiver)) Athenian lawgiver whose harsh legal code punished both trivial and serious crimes in Athens with death—hence the continued use of the word draconian to describe repressive legal measures.

My comment would be that you are asking us about filing a fraudulent return, so of course we would not advise that. You told us that the assets could be sold as an asset sale for $50K and now you say that they are worthless? Come on, that plan stinks to high heaven. He should buy the assets only, not the corp, is the best advice to give him. Not only because of the valuation of the assets, but also because when you buy a corp, you are buying any hidden problems that the corp might turn out to have. If all it has of value is the real estate or the equipment, just buy those. Especially when you plan to sell it in just a few years. There is no LEGAL way to get around the BIG tax in the situation you presented.

If it's a single corrected form, filing it on plain paper should not be a problem, Tom. I've done it before, where there were just two or three forms, and never had a problem with them being accepted.

Yes, it's too late to efile a personal return. You can still have the refund direct deposited, which will save her a week or two.

Here is a reprint of the hobby article that appeared in the October 2009 issue of Tax Reduction Letter. If you (or someone you know) has a hobby, the information in this article will prove worthwhile. Tax Law Obliterates Hobbies Lawmakers hate taxpayers' hobbies. They apply the most draconian of all taxes to hobbies. If you have a hobby or are thinking of a hobby, read this article before you take step one. Let's imagine that Congress hired you to make the most unfair and unjust income tax known to a U.S. taxpayer. How much tax would you assess? How would it work? Think about that tax. Make it as unfair as you can imagine. Now, let's compare your most unfair tax with an income tax that actually exists in U.S. tax law. Get Ready to Cry For purposes of this example, let's assume that you and your spouse report more than $175,000 of taxable income before considering the taxable income and deductible expenses of your hobby. Next, let's say that your hobby has a gross income of $500,000 and expenses of $550,000 for a loss of $50,000. Here is what current tax law does to this hobby: The $50,000 loss is not deductible under the general rule that deductible hobby expenses may not exceed hobby income. The $500,000 gross hobby income goes above the line on your Form 1040. $500,000 ($550,000 minus $50,000) in hobby expenses are deducted as miscellaneous itemized deductions where they can suffer a reduction equal to 2 percent of adjusted gross income. Gross income includes the $500,000 of gross hobby income. For purposes of the alternative minimum tax (AMT), the law disallows the $500,000 in hobby expenses and taxes the $500,000 at the 28 percent AMT rate for a tax of $140,000. You should have tears running down your cheeks, because you are paying $140,000 in federal income taxes on a $50,000 loss. Wow! Lose money, pay taxes. This is truly outrageous—and it's true. Yikes. Attack on the Mary Kay Lady Jane Smith operates as a part-time Mary Kay lady. She has a gross income of $13,000 and deductible expenses of $18,000 for a net loss of $5,000. How much tax can she pay on her $5,000 loss? John Smith, Jane's husband, earns a really good living in his law practice. Because the Smiths have a home-equity mortgage and children, they pay the AMT without considering the Mary Kay activity; therefore, the Mary Kay activity loss triggers an additional AMT of $3,640. Remember, Mrs. Smith lost $5,000 in her Mary Kay activity. This loss triggers an additional tax of $3,640 on the $13,000 of gross income (28 percent times $13,000). Mrs. Smith gets taxed on her gross Mary Kay income and receives the benefit of zero deductions. Mind-boggling, isn't it? Solutions Avoid hobbies. Make all your activities businesses. Businesses deduct all their expenses, and business losses may be carried back and forward to generate more tax benefits. If that's not for you, then avoid hobbies that generate gross income. Note that we said "gross income." Remember, for purposes of the AMT, you pay taxes on the gross and get zero benefit from your deductions. Who Created This Problem The Tax Reform Act of 1986 created the tax rules that apply the AMT to hobbies. You would think that someone during the last 23 years would have fixed this draconian tax. Not so. How the Hobby Rules Work Rule 1: Report gross income from the hobby above the line. As an individual, you report gross hobby income on line 21 of your IRS Form 1040. [1] In determining gross hobby income, [2] deduct the cost of goods sold as determined using generally accepted accounting principles; and include all gains from the sale, exchange, or other disposition of property. Rule 2: Order the hobby deductions. If deductions exceed income, then deductions are allowed only to the extent of gross income. In determining how the deductions are allowed, you need to follow the three steps below, in the order listed: [3] Deduct expenses such as mortgage interest and property taxes that would be allowed regardless of activity. To the extent that gross hobby income remains after subtracting the deductions in step 1, deduct operating expenses that do not reduce the basis of assets, such as advertising, insurance, and wages. To the extent that gross hobby income remains after applications of steps 1 and 2 above, deduct expenses that reduce the basis of assets, such as depreciation and amortization. Rule 3: Treat hobby deductions as miscellaneous itemized deductions—a below-the-line deduction. The hobby deductions allowed in step 2 go to the miscellaneous itemized deduction "jailhouse," where if you don't itemize your deductions, you get no tax benefit from your hobby deductions; or if you do itemize your deductions, your hobby deductions join the category where tax law reduces deductions by 2 percent of adjusted gross income. [4] Rule 4: Apply the AMT. The AMT on the hobby deduction works like this: Disallow all the deductions and tax the gross income. In other words, the hobby deductions that you claimed for regular tax purposes turn into taxable AMT income when computing the AMT. [5] For most taxpayers, the AMT is a most unpleasant surprise. Rules for Making the Activity a Business You do not want any hobbies that generate income, because tax law can tax the income and give you zero deductions. Solution. Make all income-generating activities businesses. The IRS looks at nine business factors. We turned those nine factors into nine questions to which your correct answer should be either "yes" or "not applicable." Here are the nine questions: [6] Do you carry on this activity in a businesslike manner with complete and accurate books and records? Do you have expertise in this activity? If not, do you use outside experts or otherwise study the activity in a manner that indicates a profit motive? Do you spend time on this activity? The more time you spend, the more this activity looks like a for-profit activity. Do you expect appreciation in property values to produce the ultimate profits? Have you had success doing this type of thing in the past? Does your history of profits and losses with this activity show that you engaged in this activity for profit? Does the profit you realize or hope to realize justify the losses incurred or expected? Considering your other sources of income, do you need this activity to work for your well-being? (If you work at this full time and need this work to pay for your household, you pass the business test on this answer alone.) Is your personal pleasure or recreation absent from this activity? (In other words, you are not golfing, fishing, horseback riding, woodworking, etc.) Remember, "yes" answers increase your chances that the IRS will consider your activity a business. You don't need nine "yes" answers. You might only need one. But you need to consider the tax ramifications of a hobby versus those of a business. The ultimate answer depends on your facts and circumstances. Endnotes 1. IRS Pub. 535, Business Expenses (2008), p. 5. 2. Reg. Section 1.183-1(e). 3. Reg. Section 1.183-1(. 4. IRC Section 67. 5. IRC Section 56((1)(A)(i). 6. Reg. Section 1.183-2(. To see the other articles in the October 2009 issue of Tax Reduction Letter, click here. Sincerely, W. Murray Bradford, CPA Publisher Tax Reduction Letter www.bradfordtaxinstitute.com

New feature for ATX: a direct Schedule D import capability from most brokerage houses, and an automated update feature so long as there is an active Internet connection.

You're welcome. Tonight I needed to hear that, Maribeth. I'm feeling sort of like this dog:

Well, heck, if that makes you feel good, I'll share the worst of it. I actually called in my son, the systems engineer, to 'fix' it! He laughed his head off!

Why did the boy carry a clock and a bird on Halloween ? It was for 'tick or tweet' ! Question: Why can't Witches have babies? Answer: Because their husbands have crystal balls

Gruntworxs has the same type program, with the double advantage that it's not Intuit, and it's not tied to any specific tax program. Check it out, they have a free trial offer. http://www.copanion.com/getstarted/index.p...CFVhJ2godtSfzMA Read their white papers, at least, before making any decision. They cover lots of things you should consider.

Hey, we all have those sort of 'moments' when we just overlook the obvious. Like when I thought I had a serious computer problem, because it was "locked up". Actually, I just had a dead battery in my mouse! Grrrrrrrrrrrrrrrrrrrrrrrrrr.

Yes, actually it is good from the point of getting you used to the program, and especially great for saving you time in Jan and Feb, when time is so short. In fact, if your old software or your other records tell you when your clients came in this year, I'd use that as a guide to who to convert first. By the way, I'd 'convert' a good mix of types right at first, to see if you can identify any certain forms that need special care. I know, in all conversions, depreciation is often the hardest thing to get perfect conversions. But you might find others that are specific to your old software I'm going to modify your topic heading to try to attract software specific input. I know we have some former Lacerte users here.

Mike, we all hope this arrangement works well for you. But be sure that you have your agreement IN WRITING, and that it spells out in detail what happens if either of you decide, after however long, that you are going to split up and go separate ways. This is often omitted at the start as "being too negative", but right now is the right time to discuss this. Because you are both in harmony now, you think, but maybe your 'assumed' assumptions are different than the other person's. For example, what happens to 'new clients' taken on during the partnership? If you split, does she keep hers and you keep yours? If so, SPELL THAT OUT IN WRITING IN THE AGREEMENT.

Basically, any time they change a form significantly it increases business for tax professionals.

I'd say so, since that is the only logical answer I can think of, although I have not researched it. Seems like he is buying assets, not the entity. The answer could be different if the LLC were taxed as a Corp or Sub S.

Most states tax the LLC the same way the Feds do, so if it was set up as an LLC/Sub S corp, then they will also treat it as a Sub S corp. But not all do. My own state of AR does not recognize it as an S Corp unless it applies for it on their state form. A real pain that can lead to having to have two sets of books for the same business! Check with your state to see what they require, and what the status is if your client did not apply for S Corp status with the state, and if at all possible, make him take whatever steps are required to get them both have the same status. Or let him know that the fee is going to be considerably higher, as you will absolutely hate this situation if they don't.

If you are considering it get the 08 program now, and start converting. This will give you time to not only evaluate the converstion [no conversion is ever 100% perfect, you always have to check the depreciation and carryovers, at a minimum] it will give you time to get familiar with the program. And then when it comes to the 09 season, you will be rolling over already tested conversions, not trying to do it all at the same time. And visit here with any questions, plus notice the 'search' button at the top, seaching here is almost as good as using the KnowledgeBase on the ATX Support. In fact, it's better for some things, since it's totally users who have real actual working knowledge. We're a friendly bunch, and will be happy to help you learn the many useful shortcuts, etc.

Glad I could help. This same issue has come up a few times already, so I will just remind you all that the 'search' button is up there at the top of the page! ;~) Using export the marked list is one of the best tools around, Ken. It gives you an excel spreadsheet which you can then modify, move columns around, eliminate some and add others, etc, to give you a great practice-management tool. Everyone should use it at least once, for preparing a mailing list resource.

Wishing you a very :bday:

I don't know about them, but I've been using it and have not noticed any difference.

Keep rethinking that one, Margaret, we don't want to lose you!!!!!

How about this one, have you seen it? 10 ft shark bitten by an estimated 20 ft shark!!!!! Great White nearly bit in half by an even BIGGER monster: Swimmers stay out of the water after warning over giant 20ft shark By RICHARD SHEARS Last updated at 1:59 PM on 27th October 2009 A 'monster' great white shark measuring up to 20 ft long is on the prowl off a popular Queensland beach, according to officials. Swimmers were warned to stay out of the water off Stradbroke Island after the shark mauled another smaller great white which had been hooked on a baited drum line. The 10-foot great white was almost bitten in half. The fictional shark at the centre of the Steven Spielberg blockbuster Jaws was estimated to be just five feet longer. We're going to need a bigger boat: The remains of a 10ft great white shark that was bitten nearly in half by what authorities - judging from the size of the bite marks - estimated was a 20ft monster 'It certainly opened up my eyes. I mean the shark that was caught is a substantial shark in itself,' says Jeff Krause of Queensland Fisheries. The great white, the most dangerous creature in the sea, was still alive when hauled onto a boat near Deadman's Beach off north Stradbroke island. News of the shocking attack on the smaller shark has sent jitters along the Queensland coast from Stradbroke Island, near Brisbane, to the Sunshine Coast further north down to the tourist mecca of Surfers Paradise, south of Brisbane. 'Whatever attacked and took chunks out of this big shark must be massive,' said 19-year-old surfer Ashton Smith. 'I've heard about the big one that's lurking out there somewhere. 'We're all being very, very cautious.' Mr John Gooding, who operates a charter fishing boat, said sharks were everywhere, although there appeared to be no specific reason for an increase in the number. 'Some days you struggle to get a fish on to the boat before the sharks take them,' he told the Courier Mail newspaper.